Best EV stocks in July 2024
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BLUEPRINT
Updated 9:00 a.m. UTC July 24, 2024
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At the beginning of the 2010s, it wasn’t clear whether electric vehicles would become a permanent fixture. After all, it wasn’t the first time the auto industry saw an EV.
But things are different now. In 2023, EVs represented roughly 18% of total car sales, a big jump from 2020 when EVs were only 4% of the market.
To select the best EV stocks in 2024, we screened companies based on several factors, such as a consensus recommendation of “buy” among Wall Street analysts, earning stability, earnings expectations and cash flow per share.
*Market data cited is as of July 1.
Best EV stocks
Li Auto (LI)
BYD Co. (BYDDF)
Stellantis N.V. (STLA)
Allegro MicroSystems (ALGM)
Compare the best EV stocks
Methodology
The best EV stocks that we have selected meet the following criteria:
- Consensus analyst recommendation of “buy” or better. A high number of analyst “buy” ratings indicates an expectation that the stock will outperform the overall market.
- An Altimeter overall grade of at least a B. We applied a screen to select the best stocks for this list, considering only stocks rated a B or better by Altimeter. The overall grade takes into account profitability, earning stability, valuation and earning expectations. Grades of B or higher for both are stocks ranked in the top quarter of nearly 5,000 stocks in Altimeter’s stock database. This indicates that these companies have strong valuations with the ability to improve returns.
- Market capitalization of at least $2 billion. If a company has a leading market share and competitive advantages in a sizable industry, it will have a market cap of greater than $2 billion.
- Rated “undervalued” by Fidelity. A valuation metric uses fundamental data to determine whether a company is overvalued or undervalued compared to its peers. Fidelity works with research firm S&P Global Intelligence to provide these ratings.
- Cash flow per share. All the stocks on this list have a cash flow per share much higher than their industries. Cash is vital to a company to finance operations, invest in the business and pay for its expenses. The exception is BYD Company, which isn’t rated due to being traded over the counter (OTC).
Why other stocks didn’t make the cut
The electric vehicle market is becoming increasingly competitive, with new players emerging seemingly every month. Some companies have attractive products and may appear to be interesting investment opportunities.
But deeper analysis shows they are less attractive than initially seemed. Negative earnings, negative cash flow and negative profit margins are just some of the worrying signs you may find among those that didn’t make the cut.
Also, consider our criteria for selecting the best EV stocks. Those that didn’t make the list are often overvalued or are not a consensus “buy” according to analysts. Their inconsistency might mean they aren’t strong enough to recommend right now.
Final verdict
While the auto industry is always changing, electric vehicles have proven they are here to stay, says James Vermillion, founder of Vermillion Private Wealth, a wealth management and financial planning firm.
As more companies enter the electric vehicle sector, investors have a growing number of choices among EV stocks.
While it’s clear that electric vehicles are the future, the industry is still in its infancy. As a result, the winners and losers are still being determined.
Therefore, investors should avoid the hype and only invest in companies with proven fundamentals. The stocks on the list are, thus far, among that cohort.
Frequently asked questions (FAQs)
Electric vehicles are a good investment because both large automakers and governments have committed to an electrification strategy. However, not all EV stocks are created equal. Investors should carefully assess the fundamentals, the competition and other factors before committing.
There are many ways to invest in electric vehicles. The simplest way is to purchase stock from an electric vehicle manufacturer. However, as seen on this list, one can also invest in battery and components manufacturers. Alternatively, investors can buy mutual funds and exchange-traded funds (ETFs) that include EV stocks.
Blueprint is an independent publisher and comparison service, not an investment advisor. The information provided is for educational purposes only and we encourage you to seek personalized advice from qualified professionals regarding specific financial decisions. Past performance is not indicative of future results.
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